US Dollar Index Slides on Eve of 2020 Presidential Debate

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The US dollar is failing to build on its momentum it had accumulated throughout September. The greenback is slumping to kick off the trading week, driven by investors pouring into the stock market and the lack of economic data. With plenty of developments ahead – at home and abroad – the buck could continue its ascent in October.

At the height of the coronavirus pandemic, the dollar had peaked at 103.00. In the following months, the plummeted about 10%, primarily due to investor confidence in the broader global financial markets and the Federal Reserve supplying economies worldwide with dollars. But with a resurgence in coronavirus cases and the steep declines in the leading stock indexes, traders have lifted the dollar to its best level in two months.

On Monday, the dollar is sliding on a rallying equities arena, with the top benchmarks posting gains of at least 1%. The broader market is advancing to start the trading week after House Speaker Nancy Pelosi revealed that the Democrats have put together a $2.2 trillion coronavirus stimulus and relief package, adding that the deal could be something the White House could approve.

Rising coronavirus cases could lift the greenback, particularly if the number of new infections affects stocks. The US has more than seven million cases and about 205,000 deaths. Confirmed daily cases are hovering in the range of 30,000 and 40,000, and health authorities are warning that the upcoming cold and flu season could further exacerbate the problem.

In addition to the presidential debates on Tuesday, all eyes will be on the September jobs report on Friday. Economists are forecasting a gain of 850,000 new jobs and an unemployment rate of 8.2%.

covid 19 pandemicSome analysts are anticipating some more growth in the buck amid currency futures positions. According to the US Commodity Futures Trading Commission, net short positions climbed to a decade high of $33.989 billion last week, up from $31.524 billion in the previous week. But experts note that investors may need to cover their short positions, which could elevate the dollar.

The US Dollar Index, which measures the greenback against a basket of currencies, tumbled 0.34% to 94.32, from an opening of 94.60, at 17:01 GMT on Monday. The index is coming off a weekly gain of around 1%, and it is on track for a monthly surge of about 2.4%. Year-to-date, the index is still down a little more than 2%.

The USD/CAD currency pair was flat at 1.3384. The EUR/USD rose 0.22% to 1.1658, from an opening of 1.1633.

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